Saba Capital Pushes Deeper into BDCs and Interval Funds
Saba Capital Management is expanding its investment strategy beyond traditional closed-end funds, targeting valuation dislocations across public and private business development companies (BDCs) and interval funds.
Known for exploiting discounts in closed-end fund markets, Saba now sees similar inefficiencies emerging across a broader universe of semi-liquid and private vehicles. The firm believes net asset values in these structures often diverge materially from the prices at which investors can exit, creating opportunities across what it describes as hundreds of billions of dollars in retail capital.
Recent investments include a $40 million position in FS KKR Capital Corp., marking Saba’s first significant move into the BDC market, and a $75 million investment in Bluerock Private Real Estate Fund following its conversion to a publicly traded closed-end fund. Saba acquired shares at discounts ranging from 30% to 40% after the fund began trading at a roughly 40% discount to NAV.
The firm has also taken equity stakes in Apollo Global Management, Ares Management Corporation and Blackstone Inc., reflecting its view that leading platforms will benefit from the long-term growth of private credit despite near-term market dislocations.
Saba’s activity follows tender offers for Starwood Real Estate Income Trust and Blue Owl Capital Corporation II, acquiring approximately $10 million in aggregate face value.
Looking ahead, Saba expects redemption pressures and rising credit risk into 2027 and 2028 to expand opportunities to provide liquidity at scale, as it deploys capital into a strategy focused on NAV inefficiencies across listed and unlisted vehicles.
